Looking Forward into 2010

As we head into the winter months, when all of our normal business cycles slow down, I wanted to give all of you a brief update on how we are doing and our outlook as we go into 2010.

The Great Recession - It seems most agree that the significant slowdown in economic activity has reached a bottom and the economy may start to improve as 2009 draws to a close. Recently it was announced that gross domestic product (GDP) turned positive in the third quarter after four consecutive negative quarters. As a result, the technical definition of a recovery may be underway.

Construction will lag - While the general economy may slowly improve (most agree it will be a slow growth in 2010-11), improvement in construction markets and our industry will lag the recovery. Key factors:
• While residential starts will increase in 2010-11, they will be 40-50% less than at the peak in 2006-07.
• Private commercial construction could continue to decline given excess inventories of commercial office and retail space. In addition, financing for private development is still very difficult to obtain. Banks are being significantly more conservative in lending as a response to the banking crisis earlier this year.

Consumers could help - To the degree that confidence comes back to consumers, our dealer business and our contractor base could benefit from higher sales. The growth will be tempered by continued high unemployment and worries about consumer debt that may delay improvement until late 2010.

Repositioning Mutual to the new reality - Lots of folks have been working on multiple fronts to reposition the Company to a lower level of sales. These efforts have been underway since late last year and continue as I write this update. The good news is we have accomplished a great deal in this area.

The last two months our results have trended better than we reforecast earlier in the year. We are seeing more cumulative benefit from some of the difficult decisions we implemented earlier in the year.

Most importantly we are positioned much more appropriately for the level of business we expect to achieve. We are also continuing to be very focused on capturing as many opportunities as we can. The market is very competitive and we want to ensure we’re working with our customers to expand sales for Mutual and our customer base.

While there continues to be economic uncertainty, the financial crisis in the US appears to be over. From here, hopefully, Mutual, our customers and the country can build from this level and start to move forward again.

Thank you for your efforts and work in these challenging times. What each of us does-matters.

Sincerely,

Joe Bowen
President